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Federal Bill in the Works to Ban Insurance Redlining on Israel Travel

March 8, 2004
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The U.S. Congress is the latest battleground in the fight over insurance companies blacklisting travelers to Israel from coverage for life insurance.

An Illinois Democrat, Rep. Rahm Emanuel, is drafting legislation to prevent life insurance companies from redlining Israel travelers.

Emanuel, a member of the House Financial Services Committee, which oversees insurance issues, is working on the first nationwide law aimed at underwriters that have rejected applicants with Israel travel plans or experience because the Jewish state is listed on a State Department travel advisory.

The congressman plans to introduce the legislation within a few weeks and so cannot discuss details of the proposed bill, Emanuel’s spokeswoman, Cecilia Prewett, said.

Prewett said Emanuel, who is Jewish, is pursuing the bill because he was “alarmed” at the policies on Israel.

“It doesn’t treat an American ally, Israel, very well, and it doesn’t reflect our values,” Prewett said.

When a JTA report earlier this year found that several life insurance companies were denying coverage to individuals who had traveled to Israel or planned on traveling to Israel, several New York legislators pledged to fight those policies in the halls of the New York State Assembly.

So far, bills on the issue are in the works in the New York State Assembly and the Illinois State Senate. “This is clearly a major step forward,” said Adam Segal, 26, a senior associate at Rabinowitz Media in Washington who was denied life insurance by Fidelity Investments of Boston because he honeymooned in Israel in 2002.

The insurance redlining has the potential to affect many Americans; about 200,000 Americans visited Israel last year.

Fidelity is among several major underwriters that routinely deny life insurance not only to Israel travelers, but also to visitors of other hot spots with a State Department travel advisory.

The list, which is continually updated in line with changing political and social conditions in each country, currently has 27 countries, including Afghanistan, Bosnia, Columbia, Haiti, Iran, Iraq, Saudi Arabia as well as Israel, the West Bank and Gaza Strip.

Jules Polonetsky, a former New York state legislator who proposed legislation that insurance companies not take travel into account when determining coverage, said Israel draws more U.S. visitors than the other countries and so Jews get unfairly victimized.

“There is clearly a disproportionate impact on Jews,” Polonetsky said.

Several Jewish groups, including the Jewish Council for Public Affairs, have urged the passage of legislation to block the practice of insurance redlining.

In 1996, New York State Assembly Speaker Sheldon Silver co-sponsored legislation on the matter when he was informed that the Metropolitan Life Insurance Company was denying coverage to frequent Israel travelers. At the time, Met Life reversed its policy and the bill never passed the state senate to become law.

While states regulate the practices of local insurance companies, the fact that many firms conduct trade across state lines may allow federal legislators to step in.

A national bill would “also avoid a lot of the confusion of trying to do it state by state,” Hoenlein said.

Fidelity refuses to issue life insurance to those who have traveled to State Department hot spots in the past two years or who plan on going to such areas in the next two years, making it among the more restrictive of the larger insurers.

Others, such as AllState of Northbrook, Ill., TIAA-CREF of New York and State Farm Insurance of Bloomington, Ill., all say they will not sell life insurance to those planning on traveling to Israel or other State Department watch- list countries.

Despite the criticism, an insurance industry spokesman defended the practice as sound insurance policy.

Jack Dolan, a spokesman for the American Council on Life Insurance, said the group was aware of Emanuel’s efforts and would oppose any such legislation.

“The issue of getting intimately involved with the underwriting of insurance companies — obviously we’d have a problem with that,” Dolan said.

Dolan said insurance companies are experts at risk assessment and make the decision to deny coverage based on many factors, including the State Department list.

He likened the issue of travel warnings to the Sept. 11, 2001, terror attacks on the World Trade Center in New York, after which many underwriters grappled with rewriting policies for those working in office towers due to terrorism concerns.

Dolan, who said 95 percent of life insurance applicants get coverage on their first application, added that insurance companies and their agents offer a variety of policies, and those seeking life insurance who get rebuffed should keep looking.

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